Intrahousehold inequality and the theory of targeting

The two literatures on targeting and on intrahousehold inequality have developed rapidly over the past 15 years, but largely independent of each other. The literature on targeting concerns itself with the design of tax and transfer programs for poverty alleviation in the presence of limited information on who the poor are. The literature on intrahousehold inequality arose out of a dissatisfaction with"unitary"models of the household, especially in explaining inequality in consumption and achievements of different household members, even after allowing for relevant differences among them. The authors begin to forge the link between the two literatures, so they can address issues policymakers face around the world. After a brief reprise of the key features of the two literatures, they indicate how the presence of intrahousehold inequality and allocation mechanisms could affect the standard analysis of targeting theory. They conclude with a list of policy questions for further research.